00:00 Speaker A
Coinbase gave us a taste of what we didn’t realize was going to happen at the end of this week. Currently, Cloudflare is eliminating 20% of its human workforce.
00:07 Speaker B
If you look at Cloudflare’s comments on this, it says that AI agents will perform tasks for employees. And even listening to Brian Armstrong’s earnings call from Coinbase, he was talking about agent AI and telling managers they should use AI agents. This is exactly the theme we will be looking at going forward.
00:40 Speaker A
These technology companies are literally redesigning and rewriting job descriptions. And in some cases, those jobs don’t exist anymore because of how much technology has advanced in the last three months.
00:54 Speaker B
As I mentioned earlier, Cloudflare has specifically said that the roles they let go are not the roles they need going forward. As you can see on screen, Challenger Gray and Christmas released this report reflecting the numbers seen in April. Approximately 33,000 jobs were cut in the technology industry alone in April. But if you look specifically at how many of those announcements were specifically related to AI, it was about 26% of the total reductions. It’s not just Cloudflare, it’s not just Block. There are many other companies announcing layoffs, including Microsoft, Meta, Amazon, Salesforce, and Oracle.
01:42 Speaker C
No one, even highly paid technology executives, likes to see people leaving a building with family portraits and boxes of various plans. But let me say this: We do see a potential earnings boom for many of these tech companies in the second half of this year. I’m considering CloudFlare. So the companies here aren’t necessarily actively investing in AI infrastructure like Meta. We are currently laying off 20% of our employees. So their second-half EPS outlook really shouldn’t be surprising, right?
02:22 Speaker D
Well, I think it will be, but it will be interesting to see the reaction. That means CloudFlare’s inventory was there. The reason they’re down today is because there’s some weakness in their underlying business prior to this layoff announcement. The same goes for Coinbase. There’s a difference between a company reacting defensively to AI’s layoff announcement and a company like last quarter, when Block aggressively announced this massive layoff out of nowhere when business was good and the stock was up about 20% afterwards. And last night, Kaz Najadia and the CEO of Opendoor actually talked about how they’re thinking about AI and adoption and headcount reduction. He was basically saying that companies that are stupid are now just looking at deploying AI to do the same workflows that this company already does. And what smart companies are doing, he said, is completely rethinking their internal processes. I believe that these are the companies that will be highly evaluated in the future.
